Sales are Up, Paris Property Prices are Stable

According to the latest report by the Chambre de Notaires de Paris, the market is buoyant without a price increase in Paris and the Ile-de-France. A slow and gradual price erosion confirmed to both sellers and buyers that waiting was no longer appropriate. The exceptionally attractive level of interest rates has motivated buyers and supported sales. Prices should not increase in the coming months with the business outlook remaining quite favorable.

On the Ile-de-France, sales of existing homes were up 11% from the 1st quarter 2015 to the 1st quarter 2016, with an even more marked improvement for homes (+13%) than for apartments (+10%). With approximately 33,300 sales, the number of existing homes sold in 1st quarter 2016 registered 3% above the average of the last 10 years (32,300 sales), but it still lacks 3,800 sales (9%) in the quarter to achieve the volume of the “high” period of 1999-2007.

In one year, according to statistics, the resale apartments prices increased in the Ile-de-France (€5,250 at the 1st quarter 2015 and 2016). For the market of resale houses, price developments were barely more pronounced (+0.6% in one year, i.e. an average increase of €1,800 per dwelling). Becoming a homeowner now costs more on the average — €289,000 in the 1st quarter of 2016, compared with €287,200 a year before. In Paris, the per square meter price amounted to €8,000/m² in the 1st quarter of 2016. In one year, prices increased by 1.2% in the Capital.

Based on preliminary contracts, this stagnation will persist, in tune with inflation. In Paris, the price per square meter continues to oscillate around €8,000/m², but it could go up to €8,060 in July (+ 1.2% in one year).

Housing demand remains strong in Ile-de-France, with a an ownership rate of less than 10% nationally. Housing always presents itself as a good investment, while there are currently few other alternative investments which are as attractive or secure. New housing has also benefited by the Pinel regulations which have provided incentives to become owners, however, interest rates are the primary factor in the encouragement of sales.

Paris apartments sold on the average about €8,000/m² with developments expected in the coming months to get closer to the  €8,460/m² reached in 2012. According to the leading indicators from the preliminary contracts, apartment prices will rise slightly in July 2016. During the first quarter 2016, the gap between the most expensive district Odeon with €14,120/m2 and the least expensive district of Pont de Flandre with €5,680/m2 is a spread of €8,440! The most expensive neighborhoods are all located in the 6th and 7th arrondissements while more affordable neighborhoods are located in the 18th and 19th arrondissements.

I warn you to take the figures with consideration that they are considerable lower than true market value for a variety of reasons. Remember, the statistics are already out-of-date, are net of agency fees (usually the buyer pays the fees to reduce the closing costs), furnishings values are deducted from the selling price and there is definitely ‘cash under the table’ (which is illegal, but done). In addition, the figures use a median, rather than average of the quality of the properties in any one given area. As in any case, the comparable properties for sale on the market are the true indicators of price! And of course, it’s still based on ‘what the market will bear!’

Be sure to read more about this in great detail from a past issue of FPI.

Read the entire first quarter 2016 report (in French) by downloading it.

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Dunhill Financial has just published their American Expat Financial Guide, in which I have contributed an article, “How to Buy Real Estate Abroad.” It’s free to you to download. 

Mark your calendar for the next American Financial Forum and Economic Update, July 7th from 6 to 8 p.m. here in Paris. See our Events and Conferences page for details and to reserve your spot!

A bientôt,

Adrian Leeds
The Adrian Leeds Group

Respond to Adrian: [email protected]

P.S. Countdown: 7 Days Until the French (me) Invade Preston Hollow! Join me, Candy’s Dirt and Versailles, Inc. builders who will be welcoming me to Dallas to speak at a special event on June 9 at 9818 Hathaway in Preston Hollow — an incredible 13,000 square-foot château sitting on over a half-acre — a home you’ll be talking about for days. The soirée begins at 5:30 p.m. with me taking the ‘stage’ at 6:30 p.m. Please be sure to RSVP to [email protected]